The second panel, “Discussion of Due Diligence,” featured Monika Mantilla, Murat Aktihanoglu, Ryan LaForce and moderator Jasmine Aarons (Aarons’ woman-led for-profit social venture VOZ secured funding from a Pipeline Fellow after she presented at the 2013 Bay Area Pipeline Fellowship Pitch Summit). The second group of panelists were asked how to assemble a due diligence team.

Aktihanoglu, an entrepreneur, investor, author and technologist, is the founder and managing director of Entrepreneurs Roundtable Accelerator. He suggested that angels should first consult a network of friends to look at opportunities and then talk to an expert. “Get a feel [for] if the company makes sense, where it stands in the market…[its] viability/sales,” said Aktihanoglu.

One of the attendants asked the panelists, “How thorough are the background checks? What is standard?” According to LaForce, an attorney in Goodwin Procter’s Business Law Department, the level of the background checks, as well as the cost associated, varies depending on the stage of the startup. In late-stage companies, background checks are one of the key costs—especially if they are going to be a core part of the management team. If a company resists a background check, that is a major red flag, said LaForce. You need to have a “thorough understanding of the people whom you are investing,” she added.

The third panel, “Structuring the Deal,” featured Tamar Gubins, Alessandro Piol, Ellie Wheeler and moderator Shaherose Charania. These panelists were asked to elaborate on the steps following due diligence.

Gubins, an associate in Goodwin Procter’s Business Law Department, stated, in regards to when an attorney should be involved in the deal process, that it depends on the level of comfort the angel has with the investment and her attorney. If you are less comfortable with the terms, utilizing an attorney is a great way to gain counsel free of charge until the deal comes through. Gubins added that you should strive to develop a great relationship with your attorney.

One of the attendees asked the panelists, “What are the pitfalls of the convertible note?”

Wheeler, a principal with Greycroft Partners, said that there are “certain times where [a convertible note] makes sense, and certain times where it doesn’t.” It varies based on personal preference but “shouldn’t be characterized as a ‘bad thing.’”

“Uncapped notes should be avoided,” she added. According to Forbes.com, uncapped rounds are more favorable to the entrepreneur; under this type of note, the investor has no guarantee of how much equity his or her money purchases.

“You lose control,” said Gubins..

The panelists also offered advice in regards to aspects of the investing world that angels shouldn’t stress over.

Piol, partner and co-founder of AlphaPrime Ventures and Vedanta Capital, said that when he first started out, he didn’t know anything about term sheets. They are the “most difficult and intimidating thing. Don’t worry about it…You will learn it by heart… [There are] always a number of terms you should know, but…[it’s] something you learn as you go. It’s part of the experience. There are a lot of bigger issues you should address, so don’t stress out too much over it.”

Wheeler, when asked about registration rights, asserted that they “are not worth spending any time on at all—very irrelevant. On the road to IPO, they get renegotiated.”

“Angels play a role more than just getting money,” Charania said, addressing Piol. “What would you expect the involvement or role of these angels[to be]?”

Piol answered, “[Angels] help companies in many ways they don’t realize they can…from legal issues to real estate issues to tech issues—there are many ways they can bring expertise to play, and that is well encouraged.”

Later in the event, Pipeline Fellows were able to gain hands-on experience, applying the lessons they had learned throughout the day by participating in a case study in which they valued a business and negotiated with an entrepreneur. No easy task and to be someone willing to take it on, you have to be something of, well, an angel.

Megan is a graduate of Delta State University in Cleveland, Mississippi, where she received a B.A. in Communication Studies with a minor in Business Administration. She has completed internships in business and communications, and was the copy editor for the university student-run paper. Currently at AlleyWatch, Megan plans to pursue a career in copyediting.

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